Equities Enjoy Modest Recovery As Turkish Lira Rebounds

Turkey's lira recovered somewhat Tuesday, while eurozone equities benefited from bargain-hunting after the previous day's selloff, comforted by upwardly-revised growth data.

London, (UrduPoint / Pakistan Point News - 14th Aug, 2018 ) :Turkey's lira recovered somewhat Tuesday, while eurozone equities benefited from bargain-hunting after the previous day's selloff, comforted by upwardly-revised growth data.

Investors shifted back into buying mode but kept a nervous eye on Ankara after Monday's bloodletting, which saw the lira hit record lows and equity markets go into freefall on concerns Turkey's financial crisis could spread globally.

In European deals, the Turkish unit advanced to 6.53 to the Dollar and 7.44 to the euro, which was well off the all-time record lows seen the previous day, after Turkey's central bank vowed to boost liquidity.

Fears about Turkey-driven contagion in other economies, particularly emerging markets, sparked a global sell-off Monday -- but there were healthy recoveries in Asian and European stocks on Tuesday.

Frankfurt and Paris both gained, while London lagged in the afternoon after news of a falling UK unemployment rate and a rising pound.

Wall Street also gained modestly at the New York opening bell.

- 'Calm for time being' - "Turkey's central bank managed to calm down the Currency markets for the time being by committing to provide liquidity for the embattled Turkish lira," said Fiona Cincotta, senior market analyst at traders City Index.

"The lira even managed to claw back some lost ground... allowing stock and commodity markets to recover." Turkey's crisis has been sparked by a series of issues, including a faltering economy, the central bank has been defying market calls for rate hikes, and tensions with the United States, which has hit Ankara with sanctions over its detention of an American pastor.

There remain concerns about how the crisis will pan out, with Turkish President Recep Tayyip Erdogan in combative mood, accusing Washington of plotting against his country.

The improving exchange rate of the Turkish currency helped take some pressure off other emerging currencies which have become entangled with the lira's woes.

But the Indian rupee still fell to a record low of 70 to the dollar Tuesday.

- Good eurozone growth - Eurozone stocks won support from news that the region's economic expansion was better than previously thought in the second quarter.

Gross domestic product (GDP) growth hit 0.4 percent in the 19-country single currency bloc in the April to June period, and had not slowed to 0.3 percent as previously thought.

That also means that British growth no longer outpaced the eurozone's in the second quarter.

On the Milan stock exchange, shares in motorway operator Atlantia were sharply lower after a bridge collapsed on the A10 Italian motorway which the company runs.

They were down just over six percent in mid-afternoon, having earlier been suspended temporarily when their drop exceeded the permitted 10-percent threshold.

In Asia, Shanghai and Hong Kong equities sank into the red on downbeat Chinese data, which also weighed on commodities.

"Chinese economic data including retail sales, industrial output and urban investment were all reported at a lower level than forecast in July," added Cincotta.

"Lower Chinese numbers will be a cause of concern for many commodity markets because a slowdown in the Chinese economy will dampen demand for key commodities such as oil, metals and agricultural goods."